Court Grants Divorce Request of Smilegate Founder Hyukbin Kwon... Record 2.5 Trillion Won Asset Division

35% of Smilegate Shares and 65 Billion Won in Cash to Be Awarded
Asset Division Totals About 2.55 Trillion Won
Significantly Exceeds Chey Tae-won and Noh So-young’s 944 Billion Won Settlement
Court: “Both Parties Equally Responsible for Marriage Breakdown”
Claim for Consolation Money Dismissed

In the divorce proceedings of Hyukbin Kwon, founder and Chief Vision Officer (CVO) of the Korean game company Smilegate, the court has ordered that approximately 2.55 trillion won be allocated to his spouse through asset division. The division will comprise 35% of Smilegate shares and 65 billion won in cash.

Hyukbin Kwon, Founder and Chief Visionary Officer (CVO) of Smilegate. Photo by Yonhap News

On September 9, the Seoul Family Court Civil Agreement Division 3 (presiding judge Jeong Donghyuk) upheld the plaintiff’s request for divorce in a case filed by Mr. Kwon’s spouse, Ms. Lee, against Kwon. However, the claim for consolation money was dismissed.

The court stated, “After examining the timeline of long-term conflicts between the plaintiff (Kwon CVO) and the defendant (Ms. Lee), the escalation of these conflicts, and the possibility of reconciliation, it is clear that the marriage has irreparably broken down.” The court further judged that responsibility lies with both parties and to an equal degree. Accordingly, it found that there was a “serious reason making it difficult to continue the marriage” as stipulated in Article 840, Article 6 of the Civil Act.

The central issue in the asset division was whether Kwon CVO’s Smilegate shares could be included. The court decided to include the shares as divisible property, considering factors such as the foundation and growth process of Smilegate, Ms. Lee’s prior ownership of a portion of shares and her registration as director or CEO of the company’s predecessor, as well as her lengthy dedication to household duties and childcare.

For the share valuation, the court took into account that Smilegate is a gaming company with future growth potential and applied the discounted cash flow method. It deemed it appropriate to assess value based on the fact that, prior to the appraisal date, Smilegate had completed a merger with four subsidiaries.

The court set the asset division ratio at 35% to Ms. Lee and 65% to Kwon CVO, granting a higher recognition to Kwon CVO’s contribution, given that his personal business acumen and management decisions played a crucial role in Smilegate’s growth.

However, the court also considered that Ms. Lee’s original family provided economic support at the company’s founding, her contributions to company management and domestic work and childcare, as well as the fact that Kwon CVO received a large dividend from Smilegate after the lawsuit was filed. The court also took into account that, in a recent separate case, Smilegate RPG—a Smilegate subsidiary—had a company valuation higher than that appraised in this case.

Kwon CVO’s net assets were evaluated at approximately 7.3375 trillion won, with the value of Smilegate shares accounting for about 7.1049 trillion won, or roughly 96.8% of the total. Based on the division ratio, the court determined that Ms. Lee is to receive about 2.55 trillion won, which would be paid through both shares and cash. Specifically, approximately 2.4867 trillion won in Smilegate shares representing 35% of ownership should be transferred, and the remaining 65 billion won paid in cash.

The court noted that most of Kwon CVO’s assets consist of unlisted Smilegate shares, making it practically difficult to raise cash for the asset division without selling shares. It also observed that, considering the challenges and expenses, including taxes, involved in disposing of unlisted shares, payment entirely in cash might not necessarily be advantageous for Kwon CVO.

The court further judged that, since Kwon CVO holds 100% of Smilegate shares, there is little risk of losing control of the company even after transferring a portion to Ms. Lee.

The approximately 2.55 trillion won in asset division is more than twice the 944 billion won awarded in the divorce remand trial between Chey Tae-won, Chairman of SK Group, and Noh So-young, Director of Art Center Nabi. However, a key difference in this case is that a significant portion was ordered to be paid in Smilegate shares rather than cash.

This content was produced with the assistance of AI translation services.